- Commissioners given freedom to decide future course with regard to DG post
- Dr. Jayasundera says top professionals picked to give leadership to a sound capital market growth
- Priyantha and Sujeewa served as Commissioners under Indrani Sugathadasa as well
- Opposition and certain market segments decry choice of men given their conflicting roles
By Nisthar Cassim
Likely to delight the retailers-spurred revitalised stock market, the Finance Ministry last night finally announced the new appointments to the embattled capital market regulator SEC, with the selection of top professionals on their own right, though the Opposition and some others decried the choices made.
Treasury Secretary Dr. P.B. Jayasundera told the Daily FT that Dr. Nalaka Godahewa had been appointed as the Chairman of the Securities and Exchange Commission (SEC), and two other professionals, former Deputy Governor of Central Bank Priyantha Fernando and Partner of PricewaterhouseCoopers Sujeewa Mudalige, as Commissioners.
For both Fernando and Mudalige, it will be akin to a homecoming as they had previously served as Ex-Officio Commissioners by virtue of their former positions at Central Bank and the Institute of Chartered Accountants respectively. Interestingly both served as Commissioners when Indrani Sugathadasa was the Chairperson.
“We have appointed professionals to make the SEC professional in its conduct and strategy. The new Commissioners along with Chairman and the existing team of Commissioners can now focus on reviving the capital market in a pragmatic manner with effective regulation and development policies,” Dr. Jayasundera told the Daily FT.
He also said that no change was made to the position of Director General, giving the Commission the freedom to decide the way forward on the key post. At present academic Hareendra Dissabandara is the Acting Director General.
“The new Commission can decide whether they want to re-advertise the DG post to find a suitable person, seek within or continue with the current arrangement,” Dr. Jayasundera added.
Whilst Godahewa and Fernando were among the speculated lot of new appointees, Mudalige was a surprise choice for the market, which had expected human rights activist and lawyer Kalinga Indratissa to fill one of the vacancies.
Unlike his predecessor Tilak Karunaratne, Godahewa is expected to play a non-Executive role in keeping with the SEC Chairmanship mandate and give leadership to the Commission with delegated and accountable role by professional SEC Secretariat.
These three new appointments fill the vacant seats in the SEC following the resignation of Chairman Tilak Karunaratne and appointed member Sanjay Kulatunga as well as P. Jayawardena, who by virtue of not attending successive commission meetings was deemed to have vacated the post. The latter’s removal (he was the senior most Commissioner at that time) triggered some controversy as it was unprecedented and was allegedly linked to a difference of opinion with Karunaratne, who however has denied any responsibility.
A fair segment of the market has been looking forward to a more pragmatic chairman to lead the SEC after former politician cum private sector entrepreneur Karunaratne was found to be over-regulating in addition to instilling fear among investors. This stand, however, continues to be denied by a vocal Karunaratne, who following his exit has taken his fight against a so-called mafia to the media and other influential groups.
Since the new appointment marks the third SEC head within nine months, the Opposition as well as certain segments of the market expressed disappointment over the new appointments.
For example, UNP MP and its spokesman on the economy Dr. Harsha de Silva said he was disgusted. “I find it very repulsive that the Government has gone out of its way to destroy any semblance of justice, fair play and good governance in the market,” de Silva told the Daily FT.
His as well as other critics’ main issue is that all new Commissioners have conflicting roles in their professional or private capacities. This, they pointed out, doesn’t make them independent.
For example, new Chairman Godahewa had until recently been the Chairman of Divasa Finance as well as a shareholder of companies owned or connected to Dilith Jayaweera, who some view as part of the so-called investor mafia, which Karunaratne alleged was responsible for putting pressure on President Rajapaksa to ask him to leave.
Fernando, after his retirement from a long stint at Central Bank, now serves on the Board of Taprobane Holdings, a company linked to the stock broking firm that was involved in the controversial NSB-TFC deal.
However, the Taprobane Board has even the likes of respected ex-banker Rohini Nanayakkara as Chairperson whilst its lawyers are Nithya Partners, which firm includes one of the most respected ex-DGs of the SEC Aritta Wikramanayake and KPMG Ford Rhodes Thornton as auditors.
The UNP and critics also don’t find Mudalige as best suited and the trio was also flagged off as being very close to Central Bank Governor Nivard Cabraal, who has been under fire by the Opposition and some market participants for the EPF’s questionable stock market investments.
Whilst individually the trio will dismiss allegations as baseless, Mudalige in fact during his first tenure at the SEC wasn’t the most popular Commissioner as some market participants found him anti-market and over-regulatory.
Independent analysts noted that the inclusion of Mudalige was a good move, minimising any alleged laxness with regard to regulations by the commission.
Dwarfing allegations by the Opposition and other critics, however, is the professional background of all the new appointees.
For example, Godahewa is professionally qualified in three different disciplines of management – engineering, marketing and finance – and had benefitted from best practices from global giant Unilever as well as Sri Lankan multinational MAS Holdings over a span of 18 years in the private sector.
He was the Managing Director/CEO for the overseas operations of MAS Holdings and was responsible for setting up operations in Vietnam, Madagascar and India between 2002 and 2006, whilst he was Director Finance/General Manager of two local manufacturing operations of MAS Holdings (MAS Shadowline Pvt Ltd. and MAS Shadeline Pvt Ltd.) previously.
Godahewa was also Director Marketing/Director Field Operations of Suntel Ltd., when it was owned by Swedish giant Telia, whilst he also served as Head of Business Development of Unilever Ceylon between 1992 and 1996.
A unique feature in Dr. Godahewa’s career is the exposure to a multitude of management disciplines covering finance, HRM, manufacturing, operations management, sales and marketing.
This rare background is in addition to his current position as Chairman of the Tourism Development Authority, whilst he also serves on several boards, including the Urban Development Authority. He also served as Managing Director/CEO of Sri Lanka Insurance Corporation when it was re-vested with the Government.
Godahewa wasn’t available for comment but those who know him well said: “Given his character, Nalaka agreed to the SEC Chief job as a challenge and is determined to make it work for all stakeholders.”
The other Commissioner, Fernando, counts more than 35 years of experience in the banking sector. He was attached to the Central Bank of Sri Lanka serving in senior and diverse capacities. He was the Deputy Governor of the Central Bank in 2010-2011 in charge of the Financial System Stability and the Corporate Services cluster.
Fernando has extensive experience and expertise in the fields of banking and financial sector regulation, information technology, national accounting and statistics, finance and fund management. At the Central Bank he was the Chairman of the Financial Stability Committee, member of the Monetary Policy Committee, member of the Risk Management Committee, and Chairman of the National Payment Council.
Mudalige passed out as a Chartered Accountant in 1991. He is also a Fellow of the Chartered Institute of Management Accountants (CIMA) of UK, Association of Chartered Certified Accountants (ACCA) of UK and the Certified Public Accountants of Australia (CPA). He was elected to the Council of The Institute of Chartered Accountants in December 1999 and is the Immediate Past President of CA Sri Lanka (formerly ICASL).
Karunaratne’s resignation was denounced by several, whilst many had called for a hands-off approach, especially by politicians, with regard to the SEC and many had commended the regulations. The IMF, Ceylon Chamber of Commerce, Sri Lanka Institute of Directors and at least five brokers were among them.
The IMF last week raised concerns over Karunaratne’s resignation, saying that under his leadership, the SEC had been taking the right steps to ensure its regulations were obeyed.
Others have faulted SEC for the market’s downfall and for driving away investors via over-regulation and creation of a fear psychosis.
Some said Karunaratne was asked to leave after he, via his outburst and actions, implicated and compromised President and Finance Minister Mahinda Rajapaksa and embarrassed the Government.
The SEC and some of its officials were also charged with discrimination and vindictiveness as they were pursuing personal agendas rather than professionally regulating and developing the capital market.
Other members of the commission are Registrar of Companies D.K. Hettiarachchi (Ex-Officio), Lolitha Abeysinghe (appointed member from private sector), Mohamed Zuraish Hifaz Hashim (appointed member from private sector), B.D.W.A. Silva (appointed member from Central Bank), Chartered Accounts Sri Lanka President Sujeewa Rajapaksha (Ex-Officio), Dr. Prathiba Mahanamahewa (appointed member from private sector) and Deputy Secretary to the Treasury Sajith R. Attygalle (Ex-Officio).